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January 18, 2019

Supreme Court Unanimously Rejects “Wholly Groundless Exception” In Determining Arbitrability Issue

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On January 8, 2019, the U.S. Supreme Court issued a unanimous decision in Henry Schein, Inc. v. Archer & White Sales, Inc. rejecting the notion that a court can determine the issue of arbitrability in cases where parties demonstrated a clear and unmistakable intent in their arbitration agreements to have issues of arbitrability determined by an arbitrator rather than by the court.
The Supreme Court’s unanimous rejection of the so-called Wholly Groundless Exception is important. The Wholly Groundless Exception was used by a number of circuit courts of appeal to retain jurisdiction over matters they unilaterally determined to be without merit, thereby depriving parties of their bargained-for right to have all issues—including issues concerning arbitrability—decided by arbitrators.
Justice Kavanaugh wrote the unanimous opinion—his first as a Supreme Court Justice. After a divisive and contentious confirmation hearing, it appears that the other justices are working cooperatively with Kavanaugh. The decision provides a thoughtful and reasoned approach based on: (1) the parties’ contract; (2) Supreme Court precedent; and (3) the express language of the Federal Arbitration Act.
To learn more about the U.S. Supreme Court's recent decision in Henry Schein, Inc. v. Archer & White Sales, Inc., please click here to read a special White Paper discussing the decision in more depth.